As the airline industry continues to struggle amidst massive layoffs and other emergency business measures, there was a little bit of hope going for one of America’s largest plane makers. Boeing (NYSE: BA) made news earlier this month that its MAX 737 jetliners, which were previously grounded all around the world due to two sudden crashes, might begin testing soon once again. While Boeing bulls were expecting that the 737 might return to service sometime soon, however, it appears that the troubled jetliner won’t be flying again for quite some time.
The company had previously estimated that flights would be resuming in late 2020 following additional testing. However, Boeing went on to say that it’s pushing this back due to additional regulatory delays. As it turned out, the Federal Aviation Administration is expected to lift its grounding order sometime in November. In turn, this means that overseas regulators could take weeks (if not months) to respond to these decisions.
International aviation regulators tend to follow the precedent set by their American counterparts. The downside, however, is that it usually takes some time for these overseas regulators to do so, delays that can cost weeks of precious time for airline companies. Additional testing, mainly maintenance and pilot training related, are now expected to be pushed back well into December.
The problems surrounding the 737 involved glitchy software onboard the plane that overrode commands from pilots that attempted to prevent these issues, resulting in two disastrous crashes in 2019. Since then, it came out that Boeing had hired inexperienced software engineers in a cost-saving measure, a decision which was largely at fault for the faulty software systems.
Shares of Boeing were up around 2.7% over the course of the day, seemingly not caring about this setback. Boeing has also gone on to say that it intends to cut the production of planes going into 2021 in an effort to help curtail its backlog problem. Before this coronavirus pandemic became a problem, Boeing was hoping that its Dreamliner jetliners would see enough sales to help mitigate the loss from its 737’s.
However, with the pandemic effectively eliminating all demand for new planes, Boeing has ended up losing billions of dollars over the past few months due to this situation. Time will tell how Boeing will fare in the months to come, but expect the company to shed many more billions of dollars throughout the remainder of 2020.
Boeing Company Profile
Boeing is the world’s largest aerospace and defense firm. With headquarters in Chicago, the firm operates in four segments, commercial airplanes, defense, space & security, global services, and Boeing capital. Boeing’s commercial airplanes segment produces about 60% of sales and two-thirds of operating profit, and it competes with Airbus in the production of aircraft ranging from 130 seats upwards. Boeing’s defense, space & security segment competes with Lockheed, Northrop, and several other firms to create military aircraft and weaponry. The defense segment produces about 25% of sales and 13% of operating profit, respectively. Boeing’s global services segment provides aftermarket servicing to commercial and military aircraft and produces about 15% of sales and 21% of operating profit. – Warrior Trading News
